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Switching Payroll Providers: A Step-by-Step Guide

Switching your payroll provider often means your business is booming, but unfortunately it can be an overwhelming task. We have simplified the process for you by providing a step-by-step guide to smoothly and efficiently switching payroll companies.

Most businesses will eventually reach a point in their growth when it makes sense to switch payroll providers; if that rings true for you, congratulations! Changing payroll providers often means business is flourishing, your internal headcount is growing, and your original provider may no longer meet the needs of your business.

However, cutting ties with your old provider and seamlessly transitioning to a new one can require quite some research. The stakes always feel high when finances are involved, and it’s important to nail every detail to make sure you’re complying with all relevant rules and regulations. 

Thankfully, we’ve simplified the process for you. Here’s your step-by-step guide to switching payroll providers. 

1. Consider Your Timing

First, it’s essential to make the switch at a time that makes sense for your company. If you have a contract, start by checking on where you stand. If you’re locked in for longer than you’d like to be, ask about the penalty for breaking the contract. If you don’t have a contract to consider, the end of the year or the transition to a new quarter are often the most convenient times to switch. 

2. Decide What Services or Features You Need.

Next, it’s time to think about what you’ll need from your next payroll provider. Start by making a list of the challenges you are having with your current provider, then get specific about additional capabilities you’d prefer to have, such as:

  • Time tracking software
  • Pay by pay workers’ compensation insurance
  • 401k
  • HR tools

When you evaluate your options, compare their offering to the must-haves on your list.

3. Give Your Current Provider Notice and Make the Switch

Step three is notifying your current provider and getting started with your new provider. After you speak to your current provider, download any documents or data you might need to transition to a new platform, like historical payroll data. Then, it’s time to officially switch over to your new provider. You’ll want to understand the ins and outs of your new contract just in case you need to make changes down the line. 

4. Give Your New Provider the Info They Need

As you continue to onboard to the new platform, the provider should guide you through uploading any

required information. Each company will handle this differently, so follow the guidance provided by the

company you choose. If you have any questions, check with your account representative to ensure you’re

getting the details right. If switching mid year you will need payroll prior balances for all employees paid that year and quarterly tax returns.

5. Explain the transition to employees. 

Last but not least, it’s time to explain the transition to your employees and guide them through the switch. It’s crucial to save this step until you have a clear idea of how the change will affect employees and what they can expect.

Switching payroll providers doesn’t have to be an overwhelming project. Just follow these six steps, and you’ll be all set for continued growth and success in your company. 
If you’re looking for a new payroll provider, contact our team at Merritt Business Solutions today about our payroll and co-employment services. Our firm offers a smart, flexible and affordable payroll, tax, and HR solution designed to help you empower your employees and build your ideal world at work.

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